Once upon a time, the country's economy seemed reliably second-rate. But following the U.S. banking crisis, its financial prudence suddenly looks like a very good investment.

The idea that a Canadian dollar should always be worth about 15 percent less than its American counterpart used to be sacrosanct. Canadian band Shadowy Men on a Shadowy Planet — whose best known song is the theme to The Kids in the Hall — even has a song "5 American 6 Canadian."

A couple of years ago, something went wrong. Our neighbors to the north became discontent with Tim Hortons, Doug Henning, Justin Bieber, and Jason Bay being their primary contributions to higher culture. All of a sudden, they wanted to beat us at capitalism, too. Today, five dollars U. S. buys five dollars CAN.

It has always been easy to dismiss Canada's economy. Despite giving birth to some great business titans (Conrad Black, the Bronfman family, Ross Johnson), much of the country's wealth owes its origins not to ingenuity but to the vastness of its natural resources — timber, grains, natural gas, zinc, uranium, and more oil than any country but Saudi Arabia. But as we've seen throughout the Arab world, former Soviet states, and South America, richness in commodities does not always pave a reliable path to a strong first-world economy.

Most of the rest of Canada's economy seemed second-rate, as though the only thing keeping it afloat were the same kind of anti-free-market culture laws that require broadcasters to play a certain percentage of homegrown TV shows and music. But somewhere along the line, sleepy, prudent Canada developed a financial regulatory system that has revealed an incredibly strong foundation and might turn out to be the model the rest of the world copies going forward.

For the last decade, the U. S. has allowed banks to own other financial institutions — insurance companies, brokerages, whatever — which many hindsight critics blame for the collapse. But in Canada, these institutions have always owned one another. The difference is that Canada has one regulator, the Office of the Superintendent of Financial Institutions, that oversees it all, and the quality of its regulation and its overarching conservatism on leverage allows it to take those risks.

America's freewheeling financial institutions have long clucked about the boring molasses Canadian banks had to slog through. While European and American banks were averaging leverage ratios of more than 25 — Lehman Brothers was over 30 before it collapsed — Canada caps that number at 20. The result? When the worldwide system collapsed, boring Canada didn't have a single bank poisoned by toxic assets and not a penny of public money was used to bail out its financial institutions.

More than simply avoiding crisis, the fact that the banks didn't collapse allowed them to do what they're supposed to do (and what ours are still largely failing to do) — lend money. See, in America, more than half the mortgages originated were intended for sale. In Canada, nearly all mortgages are held by the banks that issued them. That means it was harder for a piker to get a loan in Canada five years ago — and easier for the guy with good credit to do so today. The result? Canada's economy is expected to grow by more than 3 percent this year and next. The combination of a robust commodities supply and the tech and banking strengths that are enhanced by stable business practices is formidable. As the rest of the world's economies start to recover, so will the prices of the very commodities Canada sells, like oil. Meanwhile, where are countries going to get money to buy these commodities? From Canada's banking system, suddenly among the world's strongest.

The best way to invest in Canada is via exchange-traded funds, which are basically mutual funds that mirror certain sectors or countries but trade like stocks. The one that aims to replicate Canada's overall economy is iShares MSCI Canada Index Fund (NYSE: EWC), which apes a benchmark tied to the overall Canadian equity market. If you're hungry for a tad more risk, consider the brand-new IQ Canada Small Cap ETF (NYSE: CNDA), which uses a benchmark tied to only small publicly traded Canadian companies. You're looking at mostly mining companies and energy here, and followers of the Wild West Vancouver Stock Exchange will recall that executives at small Canadian mining companies have a habit of "falling" out of helicopters traveling over Indonesia (Google "Bre-X" and "fraud"), but I think there's a ton of opportunity here.

If you believe, as I do, that America is basically going to start printing money recklessly — more "Welcome Back, Carter" than 1920s Germany — then disciplined, sleepy Canada might be the way to go. And Shadowy Men can update its song to "6 American 5 Canadian."

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